By Mark A. Cohen
The debate throughout the retail world (if not the world at large) as to whether the current recession is merely an episodic dip or something much more serious has begun to rage. The argument is, in my view: who does and doesn’t “get it.”
In the early 1970s while working as a menswear buyer at Abraham & Straus, then the largest and most profitable of Federated Department Stores’ divisions, my divisional merchandise manager demanded of his team answers as to why our business was not good. In those days bad business may very well have been characterized by comps running less than +10 percent. My DMM was Milton Ludmar, arguably a legend in the business.
Around and around he went, demanding explanations. The conversation started with the usual suspects: bad weather, lack of advertising space, lingering effects of the gasoline shortages, and ended when one of our colleagues suggested that the real reason business had slowed was that “Skylab was scheduled to fall from the sky and therefore customers were afraid to leave their homes to shop.” After we stopped laughing, Milt ended the meeting by saying “I’m sure something is going on, but I’m also sure it’s not because the sky is falling.” (For those not yet born in the 1970s, Skylab was a precursor to NASA’s manned space station.)
Today, I come out on the side that the sky is falling. I think the ridiculous over-proliferation of space and lack of differentiable enterprises, tragic loss of creativity in merchandising and marketing, foolish over-the-top financial leverage wielded by people with no retail skill or common sense and good judgment, has finally taken its toll.
Remember when 50 to 70 percent off heralded “Going Out of Business” sales? Now it ushers in a new season’s opening promotional stance. Remember when someone coined the phrase, “same old, same old?” Now it defines much of the assortments we see in store after store after store, from discount to luxury.
I think the sky really is falling.
On the other hand, recovery from this recession/depression, or whatever it will eventually be called, will be exhilarating for those who embrace the reality we now face—for those who get it.
Exciting-looking, right-sized and correctly numbered and located stores, filled with great-looking, compelling and differentiated merchandise, priced and/or promoted in appropriately engaging ways, with customer service that always meets or exceeds customers’ expectations, have always been successful. Retailers who can and will deliver will be back on track with gusto. Those that think these times will pass and revert back to old, bad behavior—the ones who don’t get it—will never again prevail.
Mark A. Cohen is a professor at the Columbia University Graduate School of Business and former chairman/CEO of Sears Canada.